Background

I am an economist who joined the University Oslo as a postdoc in December 2010 to work on social complexity in resource management. Previously, I was a PhD candidate at Wageningen University in the Netherlands working on the interactions between natural renewable resources and institutions governing those resources. My main field of scientific interest includes the evolution of social norms and cooperation, but also the governance of marine ecosystems.

Fishers’ risk management strategies are so far poorly understood. They face high income variability due to fluctuations in market price and catches of fish. One of the ways to mitigate this risk, has been to construct portfolios of quota whose revenues are either uncorrelated or negatively correlated with each other. This has made taking a portfolio approach to fisheries more popular. This research will empirically analyse the diversity of revenues of fishers’ using Norwegian fisheries data. Using a diversity index, we will look at whether there are any longer term trends in diversification and differences in diversification between pelagic and demersal fishers. Further, we analyse whether diversification differs between vessel groups (which is based on vessel length) and depends on the home port of a vessel. This research speaks to the current financial risk management behaviour of fishers as well as their risk profile, and can provide insights into better risk management methods for fishers going forward. It also has policy implications, as some quota systems encourage specialization (such as, regulations limiting who can participate in a fishery), which can be harmful for the long term financial well-being of the fishers’ as well as the local economy at large.

Li, Yuanhao; Nøstbakken, Linda; Diekert, Florian Klaus & Richter, Andries Peter (2016). The impact of risk, time, and social preferences on individual investment decisions in a fishery.
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Excess and over capacity are key management issues in global fisheries. These issues have also received widespread attention in the literature. Previous work on firm-level investment behavior in fisheries, both theoretical and empirical, typically assumes risk neutral and profit maximizing agents. While this work has led to a much better understanding of the dynamics of investments and capacity both at the firm and the industry level, there is firm-level variation in observed behavior that has yet to be fully explained (see e.g. Nøstbakken, 2012). In this paper, we analyze individual investment behavior in the fishing industry. We use data from a combined web-based experiment and survey of Norwegian fishers conducted in the spring of 2014 to analyze this empirically. In the economic experiment, the participants won real money in a set of lotteries based on their answers and lottery outcomes. Based on their lottery choices, we derive measures of various individual preferences, including time, risk, and social preferences. We combine these preference measures with the fishers’ survey responses related to investment decisions made in the last six years, to conduct our empirical analysis. Differences in preferences across owners of fishing firms, which are typically unobservable, can potentially explain a large share of the observed variation in investment behavior found in previous studies. Extending the investment model also has important policy implications as it enables us to predict better the implications of various policies, and to take a step beyond what we can derive from the standard theoretical economic models.

We replicate the result by Andreoni (1995) that contributions to a linear public good (PG) are higher if the externality is framed positively, rather than negatively. We further show that this finding does not carry over to a non-linear PG game or the common pool resource (CPR) game. We find that the presence of a framing effect is largely affected by whether a social dilemma features strategic interactions. In the linear PG game, the best response is always to contribute nothing, and hence, independent of actions by others. With reciprocal preferences, however, contributions serve as strategic complements and kindness generates more kindness. With multiple equilibria a positive frame facilitates cooperators to coordinate on a cooperative equilibrium. In the CPR game and the non-linear PG game, the best response would be to contribute less if others contribute more. The material incentives hence counteract the effect of reciprocity, and the frame no longer serves as a coordination device. Positive framing therefore does not help to solve the tragedy of the commons. Further, we find that rivalry, as present in the CPR, is eroding the foundation of reciprocal interactions as the ones who contribute most are the ones who benefit least. In line with these results, we find that cooperation is highest in the linear PG game, and lowest in the CPR game.